Armstrong Flooring Information Chapter, Blaming Rising Prices

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(Bloomberg) — Armstrong Flooring Inc. filed for chapter safety, saying it couldn’t elevate costs excessive sufficient to maintain up with rising provide and transportation prices.

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The Chapter 11 submitting got here after the corporate spent months looking for a purchaser and haggling with lenders, based on courtroom papers filed in U.S. Chapter Court docket in Wilmington, Delaware. Armstrong stated it owed collectors $317.8 million and had property price $517 million.

“Merely acknowledged, the corporate’s rising prices considerably outpaced its pricing energy,” Armstrong Chief Government Officer Michel S. Vermette stated in a courtroom submitting.

The maker of vinyl sheets, planks and tiles is the most recent firm to hunt courtroom safety from collectors to take care of spiraling prices and weak gross sales lingering from the Covid-19 pandemic. Final month, Sungard Availability Providers LP, a know-how firm that helps company shoppers recuperate from disasters, laid a part of the blame for its chapter on increased power costs that hit its U.Ok. affiliate.

Rising Prices

Armstrong was hit final yr with $85 million in extra product and transportation prices, Vermette stated, and elevating costs for retail prospects by 10% and for business prospects by 15% wasn’t sufficient to maintain its funds afloat. A Chapter 11 submitting permits an organization to maintain working whereas it really works out a restoration plan.

Armstrong, based mostly in Lancaster, Pennsylvania, plans to proceed working with advisers at Houlihan Lokey Capital to discover a purchaser.

Because it struggled with increased prices, Armstrong haggled with lenders who imposed harsh restrictions that hampered its turnaround efforts, the CEO stated in courtroom papers. The corporate had began to modernize operations early 2020 because the pandemic started to hit.

Armstrong Flooring was spun out of Armstrong World Industries, which exited chapter in 2006 after successful courtroom approval for a plan to take care of lawsuits associated to asbestos. The substance could cause deadly lung illnesses together with most cancers. Armstrong Flooring grew to become a separate, publicly traded firm in 2016.

The case is Armstrong Flooring Inc., 22-10426, U.S. Chapter Court docket, District of Delaware (Wilmington).

(Updates with inflation influence on different corporations in fourth paragraph and firm historical past in eighth paragraph)

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